Disputes in the construction industry are common. Common reasons include contract issues, defects, construction delays, and extended completion dates.
There are various methods used to resolve disputes, and three are the most common. The right method depends on various factors.
Columbia Law School discusses that litigation is the best-known dispute resolution method. This involves the two sides presenting their case to a judge or judge and jury, and each side’s attorneys generally do most of the talking. Based on evidence and testimonies, the jury or judge hands down a decision. However, the two parties often come to a settlement agreement prior to the court date.
Litigation is expensive and time-consuming. That is one of the reasons that mediation has become a popular method. The Harvard Law School Program on Negotiation discusses that, for this process, a neutral third party guides discussion between the parties and works with them to come up with a fair agreement together.
Arbitration is a cross between litigation and mediation. There is a neutral third party, but this individual serves as the judge. Each party introduces testimony and evidence, and then the arbitrator makes a decision. Unlike in litigation, this decision is generally binding, which means there is no appeal process.
To determine which method to use, one of the first things to consider is what each of the party’s goals are. Another factor is which process will be the most effective at overcoming settlement barriers, and a third factor is which method will best help reach a beneficial outcome. Money and time are additional considerations.